USPTO Patents Application 09533906

LEXSEE 47 uspq2d 1797

INTERACTIVE GIFT EXPRESS, INC., Plaintiff, v. COMPUSERVE INC., et al.,
Defendants.

95 Civ. 6871 (BSJ)

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK

1998 U.S. Dist. LEXIS 7081; 47 U.S.P.Q.2D (BNA) 1797
May 13, 1998, Decided
May 15, 1998, Filed

DISPOSITION:

|*1 1 Construction of the Freeny patent's claims adopted.

COUNSEL:

For INTERACTIVE GIFT EXPRESS, INC., plaintiff:
David Fink, Law Offices of David Fink, Houston, TX.

For COMPUSERVE INCORPORATED, defendant:
Thomas V. Heyman, Jones, Day, Reavis & Pogue, New
York, NY.

For COMPUSERVE INCORPORATED, defendant:
Jeffrey S. Standley, Standley & Gilcrest, Dublin, OH.

For APOGEE SOFTWARE LIMITED.defendant: Jeffrey
S. Standley, Kramer & Minsky, New York, NY.

For INTERNET SOFTWARE INC., defendant: Walter E.
Hanley, Kenyon & Kenyon, New York, NY USA.

For INTUIT INC., defendant: Claude Stern.

For SOFTLOCK SERVICES, INC., defendant: Carl
Oppedahl, Oppedahl & Larson, Yorktown Heights, NY.

For TELEBASE SYSTEMS, INC., defendant: Griffith
DeNoyelles, Chernofsky & DeNoyelles, Esqs., New York,
NY.

For THE LIBRARY CORPORATION, defendant:
Raymond J. Soffientini, Battle Fowler, LLP, New York
NY.

For WALDENBOOKS, defendant: Thomas G. Carulli,
Cooper & Dunham LLP, New York, NY.

For ZIFF-DAVIS PUBLISHING COMPANY, defendant:
Randy Lipsitz, Brown Raysman & Millstein LLP, New
York, NY USA.

For THE LIBRARY CORPORATION, counter-claimant:
Raymond J. Soffientini, Battle Fowler, LLP, New York,
NY.

For WALDENBOOKS, counter-claimant: Thomas G.
Carulli, Cooper & Dunham LLP, New York, NY.

For INTERNET SOFTWARE INC., counter-claimant:
Walter E. Hanley, Kenyon & Kenyon, New York, NY
USA.

For COMPUSERVE INCORPORATED, counter-
claimant: Jeffrey S. Standley, Standley & Gilcrest, Dublin,
OH.

For ZIFF-DAVIS PUBLISHING COMPANY, counter-
claimant: Randy Lipsitz, Brown Raysman & Millstein LLP,
New York, NY USA.

For INTERACTIVE GIFT EXPRESS, INC., counter-
defendant: David Fink, Law Offices of David Fink,
Houston, TX.

JUDGES:

BARBARA S. JONES, UNITED STATES DISTRICT
JUDGE.

OPINIONBY:

BARBARA S. JONES

OPINION:

OPINION & ORDER

1 998 U.S. Dist. LEXIS 708 1 , *; 47 U.S.P.Q.2D (BN A) 1 797

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Page 2

BARBARA S. JONES

UNITED STATES DISTRICT JUDGE

Plaintiff Interactive Gift Express, Inc. ("IGE") nl
maintains that defendants, comprised of computer software
companies, publishing companies, and a retail bookstore,
have contributorily infringed and induced infringement of
U.S. Patent No. 4,528,643 (the "Freeny patent"). The
Freeny patent describes a method or apparatus for
reproducing information in a material object at a point of
sale location. With respect to the computer software and
publishing company defendants, plaintiff contends that
they are infringing the Freeny patent by selling software or
documents "online," that is, over the Internet and World
Wide Web. n2 Regarding the retail bookstore defendant,
Walden Book Company, Inc. ("Waldenbooks"), plaintiff
maintains that Waldenbooks is infringing the Freeny patent
by selling a book that includes a CD-ROM containing
-encrypted computer applications, access to which is not
possible until the consumer retrieves a password.

nl Since filing this lawsuit, plaintiff has
changed its corporate name to E-Data. |*2]

n2 Although plaintiff also alleges in its
Complaint that defendants have directly infringed
the Freeny patent, plaintiff, in its Revised Claim
Construction Report of November 12, 1996,
concedes that none of the defendants are direct
infringers.

On June 25, 1 996, the Court limited discovery to claim
construction matters and ordered plaintiff to serve its claim
construction report on defendants by August 26, 1996. On
October 7, 1996, the Court ordered plaintiff to serve a
revised claim construction report ("Report") on defendants
by November 8, 1996, the contents of which would be
binding on plaintiff. By order dated December 20, 1996,
the Court set a claim construction briefing schedule that
was subsequently modified by order dated April II, 1997.

Having reviewed plaintiffs binding Report of
November 12, 1996, and the parties' claim construction
briefs, the Court renders the following conclusions of law
interpreting Claim 1 of the Freeny patent. n3

n3 The Court notes at the outset that no
Markman hearing is needed in this case because the
Court does not require expert or other testimony to
aid it in its claim construction.

|*3|

BACKGROUND

The Freeny patent, entitled "SYSTEM FOR
REPRODUCING INFORMATION IN MATERIAL
OBJECTS AT A POINT OF SALE LOCATION," issued
to Charles C. Freeny, Jr. on July 9, 1985, from U.S. Patent
Application No. 456,730, filed January 10, 1983. On
December 28, 1994, all rights of the Freeny patent were
assigned to IGE, and IGE continues to be the sole owner of
all rights of the Freeny patent by virtue of this assignment.
The Freeny patent identifies, and claims that the Freeny
invention solves, the problems associated with the
traditional method of manufacturing, distributing, and
selling various information such as audio recordings,
motion pictures, books, software, greeting cards, or other
information that is capable of being electronically
reproduced.

I. The Traditional Manufacturing and Distribution System

According to the Freeny patent, the problem with the
preexisting system for manufacturing and distributing
information-embodying material objects is threefold. The
first problem pertains to the substantial manufacturing and
distribution costs incurred by information owners.
Information owners traditionally embody this information
in some material object (e.g., |*4| cassette tape, video
tape, floppy disk, etc.) to be distributed to various retail
outlets (or point of sale locations) for sale to consumers.
Because this process requires both manufacturing facilities
to reproduce this information in material objects and a
network for distributing the information-embodying
material objects to various point of sale locations,
information owners incur substantial costs that are
ultimately passed on to the consumers of the material
objects.

The second problem with the preexisting system as
described by the Freeny patent concerns the compensation
of these information owners. According to the Freeny
patent, information owners employing this traditional
system for manufacturing and distributing material objects
may encounter compensation problems when attempting to
collect payments from retail outlets for purchases of
material objects or when the information embodied in these
material objects is illegally reproduced.

The third problem with the traditional system
according to the Freeny patent involves the inventory-
related decisions that retailers face with respect to these
material objects. That is, retailers initially must determine

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Page 3

which information-embodying |*5) material objects
should be stocked, and then must decide the configuration
of such information (e.g., compact disc or cassette tape)
and the quantity of each such configuration. As with the
manufacturing and distribution costs incurred by
information owners, these retail costs are passed on to
consumers of the material objects. Accordingly, the Freeny
patent concludes that because of these economic
considerations it is not practical for retailers to maintain a
complete inventory of the information-embodying material
objects, which, resultantly, leads to lost sales when
consumers want to purchase particular information-
embodying material objects that have not been stocked by
the retailer.

II. The Freeny Invention

According to the Freeny patent, the Freeny invention
solves these problems associated with the traditional means
for manufacturing and distributing information-embodying
material objects by creating a more direct link between
information owners and consumers. The Freeny patent
describes a method or system for manufacturing
information-embodying material objects using a multitude
of point of sale machines that are in electronic
communication with a common host machine. |*6| The
Freeny patent refers to these point of sale machines as
Information Manufacturing Machines ("IMMs") and to the
host machine as the Information Control Machine ("ICM").
Each IMM is located at a point of sale location-"a location
where a consumer goes to purchase material objects
embodying predetermined or preselected information"-and
each point of sale location is located remotely with respect
to the system's other point of sale locations. Freeny Patent
Col. 5 Lns. 47-50. "The [ICM] is located at a remote
location with respect to each of the point of sale locations
and with respect to the [IMMs]." Id. Col. 5 Lns. 35-39. As
for "material object," the Freeny patent defines this term as
"a medium or device in which information can be
embodied or fixed and from which the information
embodied therein can be perceived, reproduced, used or
otherwise communicated, either directly or with the aid of
another machine or device." Id. Col. 4 Lns. 36-41.
Examples of material objects identified in the Freeny
patent are floppy disks, cassette tapes, phonograph records,
8-track tapes, reel-to-reel tapes, video discs, hand-held
calculators, hand-held electronic games, greeting cards,
|*7| maps, and sheet music. See id. Col. 4 Lns. 41-55.

As for the mechanics of the Freeny invention, initially
information is inputted into, encoded by, and stored within
the ICM. This encoded information is then transferred to
the IMMs via a communication link and stored within each

IMM. n4 At this stage, the IMM is now ready to support
consumer transactions. A consumer using the IMM
examines the assortment of information stored in that
particular IMM and selects a catalog code corresponding
to the information the consumer wants the IMM to
reproduce. After this selection is made, but before the
IMM begins reproducing the requested information-
embodying material object, the IMM transmits a "request
reproduction code" to the ICM thereby requesting
permission to reproduce the information selected by the
consumer onto a material object. The request reproduction
code includes the catalog code, an IMM code identifying
the requesting IMM, and may also contain other
information such as credit card data for sale approval
purposes. Freeny Patent Col. 9 Lns. 48-50, Col. 13 Lns.
25-3 1 .

n4 Whether the information must be stored in
the IMM is a point of contention between the
parties that the Court resolves infra.

1**1

The ICM receives the request reproduction code and
determines whether to authorize reproduction of the
information-embodying material object by the IMM.
Should the ICM choose to permit such reproduction, it
transmits an authorization code to the IMM. The
authorization code includes an IMM code, encoded catalog
code, encoded catalog decipher program, and an encoded
authorization select code. The encoded catalog code
instructs the IMM which information it should decode and
reproduce, the encoded catalog decipher program instructs
the IMM how to decode this information, and the encoded
authorization select code identifies the authorization
decipher programs stored in each IMM. "In response to
receiving the authorization code, the IMM decodes the
preselected information stored in the [IMM]" and then
reproduces it onto a material object, after which the
material object can be removed from the IMM by the
consumer. Id. Col. 6 Lns. 7-10.

For the sake of clarity, here is an example of how the
Freeny invention would work in the context of musical
recordings. Various musical recordings by various artists
would be inputted and stored within the ICM in an encoded
format. These recordings |*9| would then be transferred
for storage in encoded format in selected IMMs, enabling
the IMMs to support consumer transactions. A consumer
using the I MM would enter the catalog code corresponding
to the musical selection he or she wished to purchase, in
this example, Sgt. Pepper's Lonely Hearts Club Band ("Sgt.

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Pepper's") by The Beatles. n5 The IMM now transmits a
request reproduction code to the ICM, including the
catalog code identifying Sgt. Pepper's, an. IMM code
identifying the particular IMM being used by the
consumer, and possibly the consumer's credit card number
for sale approval. If the ICM approves the transaction, it
transmits an authorization code to the IMM enabling the
IMM, among other things, to decode Sgt. Pepper's into a
useable format. The IMM would then reproduce Sgt.
Pepper's onto a material object such as a cassette tape or
compact disc, after which the consumer could remove his
or her copy of Sgt. Pepper's from the IMM.

n5 Although in this example the consumer is
purchasing an entire album by one artist,
presumably the Freeny invention, assuming the
existence of proper licensing and other agreements
with information owners, would permit consumers
to select numerous songs from different albums by
various artists for reproduction onto a single
material object.

|*10]

In sum, the Freeny patent states that the Freeny
invention ensures that information owners will be
compensated in connection with the reproduction of
information, "solves the problems associated with
manufacturing, inventory, configuration distribution and
collection^] ... and permits sale of material objects
embodying information in a more efficient, econom ical and
profitable manner." Id. Col. 4 Lns. 8-18.

III. IGE's Infringement Claims

Plaintiff contends that all personal computers are
IMMs within the meaning of the Freeny patent when used
to download and reproduce information for a price.
Plaint iff further asserts that wherever a computer is located
constitutes a point of sale location pursuant to the Freeny
patent whenever information is downloaded and then
reproduced at that location, for a price, in a material object
such as a floppy disk, hard drive, tape, or paper.
Accordingly, plaintiff argues that defendants, by offering
computer software and documents for sale via the Internet
and World Wide Web are contributorily infringing and
inducing infringement of the Freeny patent. Plaintiff also
contends that defendant Waldenbooks is contributorily
infringing |*1 1 1 and inducing infringement of the Freeny
patent by selling a book that includes a CD-ROM
containing encrypted computer applications, access to

which is not possible until the consumer retrieves a
password.

IV. Claim 1 of the Freeny Patent

The Freeny patent includes 57 claims, three of which-
claims 1, 29, and 37-are independent. Claims 1 and 29 are
method claims and claim 37 is a system or apparatus claim.
As indicated in plaintiffs Report, however, there is no
distinction between the interpretation of these three
independent claims. n6 Therefore, because claim 1 is the
broadest of the independent claims, the Court limits its
claim construction analysis to claim 1, but notes that its
analysis is equally applicable to claims 29 and 37.

n6 That there is no distinction between claims
1, 29, and 37 for claim construction purposes is
evidenced by the fact that, in its Report, plaintiff
provides a detailed interpretation of claim 1, and
then when construing claims 29 and 37 simply
states "See Claim 1 ."

I*12|

Claim I of the Freeny patent provides:

A method for reproducing information in material objects
utilizing information manufacturing machines located at
point of sale locations, comprising the steps of:

providing from a source remotely located with respect to
the information manufacturing machine the information to
be reproduced to the information manufacturing machine,
each information being uniquely identified by a catalog

code;

providing a request reproduction code including a catalog
code uniquely identifyingthe information to be reproduced
to the information manufacturing machine requesting to
reproduce certain information identified by the catalog
code in a material object;

providing an authorization code at the information
manufacturing machine authorizing the reproduction of the
information identified by the catalog code included in the
request reproduction codes; and

receiving the request reproduction code and the
authorization code at the information manufacturing
machine and reproducing in a material object the
information identified by the catalog code included in the

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request reproduction code in response to the authorization
code authorizing |*I3| such reproduction.

The parties dispute (1) whether claim 1 covers the
real-time downloading of information or is limited to
predetermined or preselected information, (2) whether
claim 1 applies to CD-ROMs containing encrypted
information that requires a password to decode, and (3)
what the terms "authorization code," "point of sale
locations," "material object," and "information
manufacturing machine," as used in Claim 1, mean.

DISCUSSION

Claim construction is a matter of law for the Court to
determine. SeeMarkmanv. Westview Instruments, Inc., 52
F.3d 967, 970-71 (Fed. Cir. 1995) (en banc), affd, 517
U.S. 370, 134 L. Ed 2d 577, 116 S. Ct. 1384 (1996). To
ascertain the meaning of a patent's claims, the Court first
looks to the intrinsic evidence of record, that is, the patent
-itself, including the claims, the specification, and, if in
evidence, the prosecution history, including prior art cited
therein. See Vitronics Corp. v. Conceptronic, Inc., 90F.3d
1576, 1582-83 (Fed. Cir. 1996). Ordinarily, analysis of the
intrinsic evidence will resolve any ambiguities in the
claims, terms. See id. at 1583. The terms of a claim are
generally given their ordinary [*14| meaning, unless it
appears that the patentee chose to state clearly in the
specification or file history a special definition. See id. at
1582.

First, the Court looks to the words of the claim, both
asserted and nonasserted, to define the scope of the
patented invention. See id. A technical term used in a
patent claim is construed as having the meaning that it
would be given by persons of ordinary skill in the art,
unless it is apparent from the patent and prosecution
history that the patentee used the term with a different
meaning. See Hoechst Celanese Corp. v. BP Chemicals
Ltd., 78F.3dl575, 1578 (Fed. Cir.), cert, denied, 519 U.S.
911, 136 L. Ed. 2d 198, 117 S. Ct. 275 (1996).

Second, the Court reviews the patent specification "to
determine whether the inventor has used any terms in a
manner inconsistent with their ordinary meaning."
Vitronics, 90 F.3d at 1582. "The specification acts as a
dictionary when it expressly defines terms used in the
claims or when it defines terms by implication." Id. "Thus,
the specification is always highly relevant to the claim
construction analysis," and usually "is the single best guide
to the meaning of a disputed term." Id.

Third, |*15| the Court reviews the prosecution
history, if in evidence, to help it construe the meaning of
the claims. "This history contains the complete record of

all the proceedings before the Patent and Trademark office,
including any express representations made by the
applicant regarding the scope of the claims." Id. The
prosecution history, however, cannot enlarge, diminish, or
vary the limitations in the claims. See Markman, 52 F.3d
at 980.

Extrinsic evidence, on the other hand, "consists of all
evidence external to the patent and prosecution history,
including expert and inventor testimony, dictionaries, and
learned treatises." Id. "This evidence may be helpful to
explain scientific principles, the meaning of technical
terms, and terms of art that appear in the patent and
prosecution history." Id. "Extrinsic evidence may
demonstrate the state of the prior art at the time of the
invention." Id. Representations made to foreign patent
offices in counterpart foreign applications may also assist
in determining how a person skilled in the art would
interpret claim language. See Caterpillar Tractor Co. v.
Berco, S.P.A., 714 F.2d 1110, 1116 (Fed. Cir. 1983).
Extrinsic [*16| evidence, cannot, however, vary the
meaning of a claim that is established either by the claim
itself or by the claim as correctly understood by reference
to the specification and the file history. See Vitronics, 90
F.3d at 1584. Moreover, if the claims and specifications
are unambiguous or if an analysis of the intrinsic evidence
alone resolves any ambiguities in disputed claim terms, it
is improper to rely on extrinsic evidence. See id. at 1583.

Finally, although the Court, if possible, is to construe
claims so as to sustain their validity, including construing
claims in a way that avoids reading on prior art, it is
improper for the Court to redraft claims. See Harris Corp.
v. IXYSCorn., 114F.3dlI49, 1153 (Fed. Cir. 1997); ACS
Hosp. Sys., Inc. v. Montefiore Hosp., 732 F.2dl572, 1577
(Fed. Cir. 1984).

With these principles in mind, the Court now turns to
construing claim 1 .

I. Timing of Information Delivery

Whereas plaintiff argues that the Freeny patent covers
the real-time downloading of information to the IMMs in
addition to the predelivery of information to the IMMs,
defendants contend that claim 1 should be limited to the
predelivery of information. |*17| Real-time downloading
means that the requested information is not stored within
an IMM but rather is transmitted to the IMM promptly
after the consumer requests the item. Predelivered-
predetermined or preselected per the Freeny patent—means
that the information is stored within the IMM and the user
of the IMM merely selects the requested information from
a predetermined or preselected collection. Based on the

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claim language and the Freeny patent specification, the
Court construes claim 1 to apply only to the predelivery of
information to the IMMs. That is, before an IMM would be
capable of supporting a consumer transaction, the
information must already be stored within the IMM.
A. Claim Language

As indicated by claim 1, the Freeny method for
reproducing information in material objects involves four
"steps." And although claim 1 does not explicitly state that
these steps must be carried out in the order as listed, the
Court concludes that, at a minimum, the step listed first in
claim 1 must occur before the step listed fourth because
any other interpretation would render the Freeny invention
unworkable.

As listed in claim 1 , the steps describe, respectively,
an information |*18| delivery stage, request reproduction
code stage, authorization code stage, and a reproduction of
-information in a material object stage. The first ofthe listed
steps indicates that the information to be reproduced by the
IMM must be provided to the IMM from a remote source
and that such information is uniquely identified by a
catalog code. In other words, this step calls for the
predelivery of information to the IMM for storage within
the IMM. Following the language of claim 1, it would be
impossible for an IMM to reproduce the information-
embodying material object if the information to be
reproduced was not already stored within the IMM because
step four does not provide for the transmission from the
ICM to the IMM of the information sought to be
reproduced. Step four only describes the IMM's receipt of
"the request reproduction code" and "the authorization
code," after which the IMM "reproduces in a material
object the information ... in response to the authorization
code authorizing such reproduction." If claim 1 was
intended to include the real-time downloading of
information to the IMM, then in addition to providing for
the IMM's receipt of the request reproduction code and
|*19| authorization code, step four also would call for the
IMM's receipt of the information to be reproduced.
Alternatively, if it was intended for the patent to cover the
real-time downloading of information, the patent could
have defined the term "authorization code" such that it
included the requested information as part of that code. n7
Nowhere in the patent, however, is the term "authorization
code" defined in this manner.

n7 The Court further notes that claims 29 and
37 also support this reading and that claim 37, in
fact, explicitly states that the information received
from the ICM is "stored" in the IMM.

B. The Specification

In addition to the very language of claim I , the Freeny
patent specification abundantly supports defendants'
position that the Freeny patent does not apply to the real-
time downloading of information. It is indicated throughout
the patent specification that the IMMs "store" the
information rather than receive the information for the first
time when a consumer interacts with the IMM. |*20| For
example, the patent states:

In general, information is inputted into the information
control machine, via the input line and the inputted
information is encoded and stored in the information
control machine. The encoded'information stored in the
information control machines is communicated to the
information manufacturing machine via the communication
link or the communication link and the received encoded
information is stored in each of the information
manufacturing machines.

Freeny Patent, Col. 5 Lns. 51-59. It also states that "in
response to receiving the authorization code, the
information manufacturing machine decodes the
preselected information stored in the information
manufacturing machine and provides the decoded
information on the output line." Id. Col. 6 Lns. 7-1 1. These
are but two examples.

Moreover, the specification explains that the IMMs
are in fact constructed to store the collection of encoded
information in a permanent storage unit called the "master
file unit." "Each information manufacturing machine is
constructed to receive encoded information ... and store
received encoded information." Id. Col. 5 Lns. 21-24. In
turn, the "encoded |*21| information along with the
corresponding catalog codes are communicated to the
information manufacturing machine identified by the IMM
code via the communication link for storage in the master
file unit of the information manufacturing machine." Id.
Col. 12 Lns. 8-13.

The master file unit is constructed to function as a
permanent storage unit. The master file unit is constructed
and adapted to receive encoded information along with the
catalog codes uniquely identifying the encoded information
over the communication link. In one other mode, the
master file unit receives encoded information and the
catalog codes on a signal path. The master file unit stores
the received encoded information and the catalog codes.

1998 U.S. Dist. LEXIS 7081, *;47 U.S.P.Q.2D (BNA) 1797

Id. Col. 9 Lns. 39-47. Therefore, as explained by the
specification, the first step of claim 1 , wherein information
is provided to the IMMs, is performed so that the
collection of encoded information can be stored at each
IMM.

This encoded information, as stored in the IMM, is
referred to throughout the specification as "preselected" or
"predetermined" information. Clearly, these terms refer to
the process whereby the information owner selects which
|*22] information should be inputted into the ICM and
then transmitted to the IMMs for storage. The information
is therefore "preselected" or "predetermined" because the
information to be transmitted to and stored in the IMMs is
selected or determined before the consumer uses the IMM.

Finally, the patent specification teaches away from the
real-time downloading of information. The patent states
that in "one embodiment" the ICM could be programmed
to support the real-time delivery of information to the
IMMs. Id. Col. 24 Lns. 33-58. In such an embodiment "the
information manufacturing machines would not have any
encoded information stored therein and could only function
to reproduce information in material objects in response to
receiving an authorization code which would include the
encoded information." Id. Col. 24 Lns. 41-46. After
presenting this scenario, however, the specification labels
the real-time method of delivery economically unsound,
from both a time and money standpoint, and limits any
such proposed use to updating the encoded information
previously transmitted to and stored in the IMMs. See id.
Col. 24 Lns. 46-53.

In addition to teaching away from using a real-time
|*23| delivery method, this portion of the patent
specification also supports the Court's interpretation that in
order for the Freeny invention to work at all, claim 1 , as
written, requires some sequence to the steps, and that, at a
minimum, step one must precede step four. Specifically,
the information must be transferred to and stored in the
IMM before the IMM is capable of supporting consumer
transactions because step four describes the IMM's receipt
of only request reproduction codes and authorization codes
and says nothing about the IMM's receipt of the
information to be reproduced. If claim 1 was intended to
include the real-time downloading of information to the
IMM, then the patent would explicitly state, as it does
when discouraging the use of real-time delivery, that the
authorization code would have to include the encoded
information in order for the Freeny invention to support
real-time delivery. See id. Col. 24 Lns. 41-46. Nowhere in
the patent is the authorization code defined to include the
information to be reproduced as part of that code.

Accordingly, based on the language of claim 1 and the

Freeny patent specification, the Court construes claim 1 to
apply only to the |*24| predelivery of information to the
IMMs.

II. Authorization Code

Plaintiff and defendants also dispute the meaning of
the term "authorization code." In its Report, plaintiff
asserts that the authorization code "enables the information
manufacturing machine (the consumers [sic] computer
system) to reproduce the electronic data in a material
object." Report, Ex. D. Plaintiff also states that a
consumer's Internet Protocol (IP) address constitutes an
authorization code. Defendants dispute both of these
definitions and argue that the "authorization code should
be construed to mean an electronic signal that instructs the
requesting computer how to reproduce an encoded item of
information." Defendant CompuServe's Brief on Claim
Interpretation at 39.

A. IP Address as Authorization Code

The Court agrees with defendants that a hardware
address such as an IP address as used on the Internet does
not constitute an "authorization code" as that term is used
in the Freeny patent. "The Internet Protocol (IP) provides
for the delivery of data through a set of interconnected
packet-switched networks (an internetwork or internet). IP
transmits and routes datagrams from sources to
destinations |*25| based on a fixed-length address." Chris
Shipley & Matt Fish, How the World Wide Web Works
153 (1996) (cited in Plaintiffs Report, Ex. C).

As plaintiffs source indicates, a hardware address
such as IP is simply a routing mechanism. Accordingly, in
the context of the Freeny invention, it is the IMM code,
and not the authorization code, that corresponds to an IP
address. As indicated in the Freeny patent specification, the
IMM code "uniquely identifies one particular information
manufacturing machine." Freeny Patent, Col. 7 Lns. 5 1 -53;
see also id. Col. 14 Lns. 22-25 ("The IMM code provides
a means for the information manufacturing machine to
determine if a particular message is intended to be received
by that particular information manufacturing machine.").
And although the IMM code is a component of both the
authorization code and request reproduction code, it is a
distinct code that serves only to route information from the
ICM to the IMM. Furthermore, the Court notes that if the
authorization code and IMM code were one in the same,
then the term "authorization code" would be defined the
same as the IMM code, and there would be no need to have
two separate codes. Accordingly, |*26| an IP address
does not correspond to an "authorization code" as that term
is used in the Freeny patent.

1998 U.S. Dist. LEXIS 7081, *;47 U.S.P.Q.2D (BNA) 1797

B. Authorization Code as Enabling Reproduction

Defendants also dispute plaintiffs interpretation of
authorization code as "enabling" the IMM's reproduction
of the information-embodying material object. To the
extent that plaintiff uses the term "enables" as a synonym
for "authorizes," the Court agrees with plaintiffs
interpretation. n8 That is, the purpose of the authorization
code is to "authorize" reproduction of the information-
embodying material object. This, however, does not
amount to a definition. For although it explains what the
authorization code does, it does not explain precisely how
it does it.

n8 Presumably defendants would also agree
with this interpretation as they recognize that the
patent explicitly states that the purpose of the
authorization code is to "authorize" the
reproduction of the information-embodying
material object. See, e.g., Defendant CompuServe's
Brief on Claim Interpretation at 35.

1*27]

As stated previously the authorization code is
comprised of several other codes, including an IMM code,
encoded catalog code, encoded catalog decipher program,
and an encoded catalog authorization select code. See, e.g.,
Freeny Patent, Col. 9 Lns. 58-61. The encoded catalog
code instructs the IMM which information it should decode
and reproduce, the encoded catalog decipher program
instructs the IMM how to decode this information, and the
encoded authorization select code identifies the
authorization decipher programs stored in each IMM. The
manufacturing control unit located within each IMM "is
constructed and adapted to decipher or decode a received
encoded catalog code, encoded catalog decipher program
and encoded authorization select code." Id. Col. 9 Lns. 62-
65. "In response to receiving the authorization code, the
IMM decodes the preselected information stored in the
[IMM]" and then reproduces it onto a material object, after
which the material object can be removed from the IMM
by the consumer. Id. Col. 6 Lns. 7-10.

Clearly, the encoded catalog decipher program is the
seminal component of the authorization code. Without it,
the IMM would be unable to convert | *28| the information
from its encoded, unusable format to its decoded, usable
format. Therefore, the Court concludes that the encoded
catalog decipher program is the true "authorizing"
mechanism of the Freeny invention. Accordingly, the term
"authorization code" as used throughout the Freeny patent,

must, at a minimum, include a code that enables the IMM
to decode or decipher the information stored in encoded
format at the IMM that the IMM is to reproduce in a
material object.

III. Point of Sale Location

The parties also present different interpretations of the
term "point of sale location" as used throughout the Freeny
patent. In its Report, plaintiff defines point of sale location
as the "place at which the consumer or purchaser makes the
purchase." Report, Ex. D. Accordingly, because plaintiff
contends that any personal computer can constitute an
IMM within the meaning of the patent, under plaintiffs
definition of point of sale location, anyplace where a
personal computer is located constitutes a point of sale
location when that computef is used to reproduce
information in a material object for a price. Defendants, on
the other hand, argue that a "point of sale location" |*29]
is a location, such as a retail outlet, where consumers can
go to purchase information-embodying material objects.

Again, defendants, interpretation is entirely correct.
The Freeny patent makes it abundantly clear that a point of
sale location is a location such as a retail outlet. When first
used in the text of the specification, the term "point of sale
location" explicitly refers to "retail outlets." Freeny Patent,
Col. 1 Lns. 17- 18. The specification then continues to refer
to a point of sale location as a "retail outlet" or "retailer,"
see, e.g., id. Col. 1 Lns 37-38; Col. 2 Ln. 13; Col. 2 Ln. 63;
Col. 2 Ln. 67, and defines "retailers" as "owners of point
of sale locations." Id. Col. 3 Lns. 41-42. Later, the
specification indicates that "the point of sale location is a
location where a consumer goes to purchase material
objects embodying predetermined or preselected
information." Freeny Patent, Col. 5 Lns. 47-50. Clearly,
this language, and particularly the word "goes," indicates
that a point of sale location is a place, such as a retail
outlet, to which a consumer travels in order to purchase
material objects embodying preselected information.

Moreover, a point of sale |*30| location must be a
location at which blank material objects are available for
sale to consumers. There is no indication in the patent that
the material objects on which the IMM is to reproduce
information are stored in the IMM. Rather, the patent
indicates that blank material objects are sold to consumers,
separate and apart from the IMM, at the point of sale
location. As the Freeny patent indicates, "each point of sale
location has at least one information manufacturing
machine, at least one reproduction unit and a plurality of
blank material objects." Id. Col. 12 Lns. 66-68. The patent
further indicates that the owners of point of sale locations

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Page 9

are the ones that sell to consumers the blank material
objects that are to be used with the I MM, such as 8-track
or cassette tapes, and that this sales transaction is separate
from any sale that results from the IMM reproducing
information onto this material object. See id. Col. 13 Lns.
39-44.

Finally, the patent's single reference to point of sale
location as a "consumer's home," Id. Col. 3 Lns. 66-67,
does not support plaintiffs interpretation. At the point in
the specification where the term "point of sale location" is
used |*31 1 to refer to a consumer's home, the patent is not
describing the Freeny invention, but rather a prior art cable
television distribution system wherein a particular cable
program would be delivered to a consumer's home in
response to the consumer requesting that program and
paying the program owner the requisite fee. Immediately
following the description of this cable system, however, the
Freeny patent criticizes this system for being unable to
- perform certain functions of the Freeny invention. See id.
Col. 4 Lns. 1-8. Nowhere else in the patent is the term
point of sale location used to refer to a consumer's home.
Therefore, viewing the patent as a whole, and considering
the purpose of the Freeny invention, the numerous
references throughout the specification to "retail outlet" or
"retailer" in connection with the term "point of sale
location," and the context in which this single passing
reference to a consumer's home as a point of sale location
is made, the Court concludes that the patent does not
support plaintiffs definition of "point of sale location" as
either a consumer's home, personal residence, anywhere
where a personal computer may be located, or the "place at
which |*32 1 the consumer or purchaser makes the
purchase."

Accordingly, the Court holds that a "point of sale
location," is, at a minimum, a place-such as a retail outlet-
to which a consumer travels for the purpose of purchasing
material objects wherein preselected information can be
reproduced, and at which blank material objects are
available for sale to consumers. n9

n9 For the sake of clarity, the Court notes that
a retail store is not the only type of location that
could constitute a "point of sale location" within
the meaning of the Freeny patent. For example, a
wholesale store satisfying the limitations of the
Freeny patent claims could constitute a point of
sale location. A point of sale location, however,
cannot be a consumer's home.

IV. Material Object

Because there is some dispute between the parties as
to what constitutes a "material object" within the meaning
of the Freeny patent, and considering that the very purpose
of the Freeny invention is to reproduce information in
"material objects," the | *33 1 Court now turns to construing
this term. As defined in the Freeny patent, a "material
object" is "a medium or device in which information can be
embodied or fixed and from which the information
embodied therein can be perceived, reproduced, used or
otherwise communicated, either directly or with the aid of
another machine or device." Freeny Patent, Col. 4 Lns. 36-
41. Immediately after defining "material object," the
Freeny patent presents a nonexhaustive list of examples of
material objects, including floppy disks, cassette tapes,
phonograph records, 8-track tapes, reel-to-reel tapes, video
discs, hand-held calculators, hand-held electronic games,
greeting cards, maps, and sheet music. See id. Col. 4 Lns.
41-55.

In its Report, however, plaintiff defines "material
object" as "[a] paper with printed information, or a
recording on a floppy disk, hard drive, or tape etc." Report,
Ex. D. Far from presenting a definition of "material
object," plaintiffs Report merely provides further examples
of purported "material objects." Accordingly, the Court
now turns to what constitutes a "material object" under the
Freeny patent.

The Court agrees with defendants that, at a minimum,
a material |*34] object (1) must be removable from the
IMM and for use at a location other than the point of sale
location, (2) must be offered for sale as an independent and
stand-alone commodity at the point of sale location, and (3)
must be separate and distinct from the IMM. Regarding
removability, the Freeny patent presents a method for
reproducing information in material objects at a point of
sale location. As described by the patent, after the IMM
receives the authorization code from the ICM, the IMM
decodes the requested preselected, information stored
within it and then reproduces the requested information in
a material object that is removed from the IMM by the
consumer. Furthermore, that all of the examples of material
objects presented in the patent itself, and that all those
listed in plaintiffs Report but for a computer hard drive,
are objects that are removable by the consumer, indicates
that material objects must possess this quality. This is also
buttressed by the fact that one of the purposes of the
Freeny invention is to solve the problems associated with
the manufacturing, distribution, and'stocking of material
objects.

A material object must also be offered for sale at point
|*35| of sale locations as an independent and stand-alone

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Page 10

commodity. This requirement was touched upon previously
when the Court noted that a point of sale location must be
a location at which blank material objects are available for
sale to consumers. That is, a material object must be
offered for sale independently from the information that
may be reproduced onto that material object.

Finally, and even though it is self-evident from the
patent, the information-embodying material object
manufactured by the IMM must be separate and distinct
from the IMM. That is, the IMM is the device that
reproduces the information in a material object. See, e.g.,
Freeny Patent, Col. 5 Lns. 21-31.

Thus, a hard drive is not a material object within the
meaning of the Freeny patent because it is not removable
in the sense envisioned by the Freeny patent. A hard drive
is a fundamental component of a computer. Basically, a
hard drive is a device that physically stores information
such as data or software within the computer. And
" although the hard drive, literally speaking, can be removed
from the computer, to do so would require the computer's
disassembly. Clearly, the dismantling of the IMM is not a
|*36] step or procedure the Freeny patent indicates a
consumer must undertake in order to obtain the material
object. Rather, the Freeny patent describes an invention
whereby an IMM reproduces information in a material
object that is then removed from the IMM by the
consumer.

Furthermore, a hard drive cannot constitute a material
object because pursuant to the Freeny patent an IMM is
separate and distinct from the material object. In its Report,
plaintiff states that a personal computer constitutes an
IMM when used to download and reproduce information
for a price, and, as discussed above, that a computer's hard
drive can constitute a material object. See Report, Ex. D.
Therefore, in this scenario, the IMM and material object
would be the same device. The hard drive would be acting
as an IMM because it is the software stored on the
computer's hard drive along with other computer hardware
such as a modem that would permit any downloading to
take place. The hard drive would also be acting as the
material object, however, because it is on the hard drive
that any downloaded information would be stored. As
described in the patent, however, the IMM is the device
that reproduces information |*37| onto the material object.
See, e.g., Freeny Patent, Col. 5 Lns. 21-31. Accordingly, a
hard drive cannot constitute a material object within the
meaning of the Freeny patent because the IMM must be
separate and distinct from the material object.

V. Information Manufacturing Machine (IMM)

The parties also dispute the meaning of the term
"IMM." As the specification and Figure 1 of the Freeny
patent indicate, the IMM is comprised of four separate and
distinct components: "a master file unit, a manufacturing
control unit, information manufacturing unit, and the
reproduction unit." Id. Col. 6 Lns. 27-30. nlO Each of
these components is linked by various signal paths. See
Freeny Patent, Figs. 1, 3, 4. Arrows in the figures that are
part of the Freeny patent indicate the direction in which the
signals flow along these signal paths, nl 1 As indicated by
the Freeny patent specification, each of an IMM's four
components performs a different function.

nlO Figure 3 of the Freeny patent, which
presents a "schematic view of the information
manufacturing machine portion of the point of sale
information manufacturing system shown in Fig.
1," id. Col. 4 Lns. 27-29, provides some additional
details regarding three of the IMM's four
components. The manufacturing control unit is
comprised of a manufacturing program unit,
communication modem, and an information catalog
and request unit. The master file unit is comprised
of a digital storage unit and a reader. Incidentally,
the Court notes that Figure 3 mislabels the master
file unit as 26 rather than 32. The patent
specification makes clear, however, that the master
file unit is comprised of these two components. See
Freeny Patent, Col. 1 9 Lns. 55-56. The information
manufacturing unit includes a digital information
unit and a digital to analog converter. Finally,
Figure 3 does not provide any additional details
regarding the reproduction unit. |*38|

nil So, for example, as indicated by the
direction of the arrow in Figure 1, and the
specification text, output line 22 sends signals from
the information manufacturing unit to the
reproduction unit. See Freeny Patent, Fig. 1 ; Col. 5
Lns. 28-31.

A. Manufacturing Control Unit

The manufacturing control unit ("MCU") receives
"request reproduction codes which include IMM codes and
catalog codes" via an input line, and communicates "the
received request reproduction codes" over a
communication link to the ICM. Id. Col. 9 Lns. 48-53. The
MCU also receives from the ICM, via a communication
link, "authorization codes which include IMM codes,
encoded catalog codes, encoded catalog decipher programs

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Page 1 1

and encoded authorization select codes." Id. Col. 9 Lns.
57-62.

The MCU also has a plurality "of authorization
decipher programs stored therein and each authorization
decipher program is uniquely identifiable via an
authorization select code." Id. Col. 9 Lns. 54-57. The MCU
"is constructed and adapted to decipher or decode a
received encoded catalog code, encoded catalog decipher
program |*39| and encoded authorization select code in
accordance with one predetermined authorization decipher
program." Id. Col. 9 Lns. 62-66. "After decoding the
received encoded catalog code, the encoded catalog
decipher program and the encoded authorization select
code, the manufacturing control unit stores the
authorization select code for use in deciphering the next
received encoded catalog code, encoded catalog decipher
program and encoded authorization select code." Id. Col.
10 Lns. 5-11. Then, the MCU sends via a signal path the
decoded catalog code to the master file unit component of
the IMM. See id. Col. 10 Lns. 11-14.

The MCU also must be constructed in such a way such
that it can (1) "decode[] the decipher program and the file
decipher from the encoded information" to be reproduced
in a material object; (2) "temporarily store[] the decoded
decipher program and the decoded file decipher program";
(3) decode the information that is to be reproduced in the
material object; and (4) "provide the decoded information
[to be reproduced in the material object] on the signal path
for reception by the information manufacturing unit," a
third component of the IMM. Id. Col. |*40| 10 Lns. 27-
40.

Finally, after the selected information ultimately is
reproduced in the material object, "the manufacturing
control unit then receives the encoded information from the
information manufacturing unit over the signal path and
provides the encoded information on the signal path to be
received by and restored in the master file unit." Id. Col. 10
Lns. 50-55.

B. Master File Unit

The master file unit ("MFU") functions as "a
permanent storage unit." Id. Col. 9 Lns. 39-40. The MFU
receives and then stores both the encoded information that
is later reproduced in a material object and the catalog
codes that uniquely identify portions of the encoded
information. See id. Col. 9 Lns. 40-47. Both the encoded
information and the catalog codes are transmitted from the
MCU to the MFU via signal paths. See id.; see also Col. 10
Lns. 11-14. After a consumer at the point of sale location
selects the information he or she wishes to have
reproduced in a material object, the MFU provides this

information via signal path for temporary storage in the
information manufacturing unit, the third component of the
IMM. See id. Col. 10 Lns. 14-21.

C. Information Manufacturing |*41| Unit

The Information Manufacturing Unit ("IMU")
"temporarily store[s]" the encoded information to be
reproduced in a material object after it is received via
signal path from the MFU. See id. Col. 10 Lns. 14-26. The
IMU also must be capable both of receiving from the MCU
the decoded information to be reproduced in a material
object in a digital format and of converting that
information to an analog format. See id. Col. 10 Lns. 40-
45. Finally, the IMU must be able to transmit via signal
path the converted decoded information that is to be
reproduced in a material object to the fourth component of
the IMM, the reproduction unit.-See id. Col. 1 0 Lns. 4 1 -48.

D. Reproduction Unit

The reproduction unit is designed to "reproduce
received information in a material object." Id. Col. 5 Lns.
30-3 1 . The reproduction unit must be able "to receive the
information [to be reproduced in the material object from
the IMU] in an analog format [via] signal path," and then
"reproduce the received information in a material object."
Id. Col. 10 Lns. 45-48.

Accordingly, it is abundantly clear from the patent that
these four components of an IMM are separate and distinct
[*42| from one another and perform different functions. It
is equally clear that the material objects located at point of
sale locations and onto which the information is to be
reproduced are separate and distinct from the IMM as a
whole, as well as from any of the IMM's component parts.

VI. CD-ROMs

As noted previously, one of the defendants in this
action is Waldenbooks, a retailer of books. In 1995,
Waldenbooks sold a book entitled "Unauthorized Windows
95 Developer's Resource Kit" by Andrew Schulman.
Contained on the inside of the back cover of the book is a
"try-before-you-buy CD-ROM" entitled "Smash Hits for
Programmers Vol. 1.1." The CD-ROM contains copies of
various computer application programs that the book
purchaser can try out--"test drive" per the application-if
his or her computer is equipped with a CD-ROM drive.
Should the book purchaser want to test drive or purchase
one of the application programs, the 1-800 telephone
number of the vendor of the software, "The Programmer's
Shop," is provided on the book jacket. The book purchaser
must call this 1 -800 number in order to receive a password
to "unlock" the desired program that is contained in its

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Page 12

entirety on the CD-ROM [*43] as purchased as part of the
book from Waldenbooks. nl2 Upon receiving the
password, the selected program is automatically decrypted
and installed from the CD-ROM onto the consumer's
computer.

n 1 2 Some programs are not contained on the
CD-ROM and therefore cannot be unlocked upon
entry of the password and then installed. Rather,
these programs must be shipped separately to the
consumer. Only those programs contained on the
CD-ROM that can be unlocked are at issue here.

Because the product sold by Waldenbooks is a book
containing a CD-ROM, which differs from the on-line
products and services of the other defendants, the Court
now examines several additional claim construction issues
unique to CD-ROMs.

Plaintiff contends that Waldenbooks, by selling the
book containing the CD-ROM, induces infringement of the
Freeny patent. According to plaintiffs Report:

In the case of a CD-ROM having encrypted information,
the source can mail or otherwise make the CD-ROM
availableio the consumer. Typically, the consumer |*44|
contacts the source through a modem or even by telephone
to obtain the authorization code for a specific file(s) on the
CD-ROM. The consumer thereafter uses the computer
system to enter the authorization code, with the request to
reproduce a file by using the file identity (catalog code)
and the request (reproduction code).

Report, Ex. C. The term "source," as used in this passage
from plaintiffs Report, is defined by plaintiff as "a
remotely positioned computer system such as a 'server' in
modern terms." Report, Ex. C.

Again plaintiffs interpretation is simply untenable. In
fact, of all of plaintiffs claim interpretations, this one is
possibly the most farfetched. First, as described in the
Freeny patent, the reproduction code and authorization
code are separate and distinct and serve different functions.
In the case of the CD-ROM described above, however,
only one code is required. That is, upon calling the 1-800
number, the consumer is given a password that unlocks the
encrypted program. Therefore, in the lexicon of the Freeny
patent, this password acts as the authorization code.
Because the Freeny invention requires both a request
reproduction code and an authorization |*45| code, Claim
1 must be interpreted such that it is limited to a method

wherein (1) both codes are present, (2) the request
reproduction code is separate and distinct from the
authorization code, and (3) each code serves a different
function. Accordingly, the Freeny patent does not cover the
CD-ROM described above because only one code (or
password) is required to unlock the encrypted programs
contained on the CD-ROM.

Second, the Freeny invention requires a request
reproduction code to be received initially by an IMM and
then later sent from the IMM to an ICM. The Freeny
invention also requires an authorization code to be sent
from an ICM to the IMM. That is, the Freeny patent
describes an invention wherein two machines, an ICM and
an IMM, electronically communicate with each other. A
person is neither an IMM nor an ICM. In short, the Freeny
patent clearly does not cover methods or apparatus wherein
the consumer via a telephone call orally receives a
password that permits him or her to unlock a computer
application program contained on a CD-ROM that is being
used in the consumer's personal computer.

CONCLUSION

In an obvious attempt to expand the scope of its patent
beyond [*46] that which was intended, plaintiff
implausibly asserts that its patent covers certain uses of the
Internet and World Wide Web, and applies to certain CD-
ROM applications. It is abundantly clear to the Court,
however, that the Freeny patent claims and specification do
not support plaintiffs broad interpretation.

In light of the foregoing, the Court enters the
following Order adopting the following construction of the
Freeny patent's claims:

1. Claims 1-56 of the Freeny patent are confined to a
method, system or apparatus whereby a consumer uses an
"information manufacturing machine" ("IMM") (as defined
below) to reproduce in a material object (as defined below)
an item of information from among a collection of
catalogued information items, all of which were
predelivered to and stored at the IMM. Claims 1-56 of the
Freeny patent do not cover real-time transactions where the
requested item of information is transmitted to the IMM at
the time it is requested by the consumer.

2. The term "authorization code" as used in claims 1-56 of
the Freeny patent, must, at a minimum, include a code that
enables the IMM to decode the information that is to be
reproduced in a material |*47| object and that was
previously stored in encoded form at the IMM.

3. Claims 1-56 of the Freeny patent are confined to a

1998 U.S. Dist. LEXIS 7081, *; 47 U.S.P.Q.2D (BNA) 1797

method, system or apparatus that requires both an
"authorization code" and a "request reproduction code."
The "authorization code" and "request reproduction code"
are separate and distinct codes, and each code serves a
different function.

4. Claims 1-56 of the Freeny patent are confined to a
method, system or apparatus that requires the IMM to
receive a "request reproduction code," transmit the "request
reproduction code" to an "information control machine"
("ICM"), and receive an "authorization code" from the
ICM.

5. The term "point of sale location" as used in claims 1-56
of the Freeny patent is a location that must, at a minimum,
have each and every one of the following attributes:

a. It must have at least one IMM and therefore at least one
device for reproducing information in material objects (a
reproduction unit), and at least two blank material objects
upon which preselected information stored at the IMM can
be reproduced;

b. It must have available for sale to consumers, separate
from the IMM, blank material objects wherein preselected
[*48| information can be reproduced; and

c. It must be a location to which a consumer goes or travels
for the purpose of purchasing material objects onto which
preselected information can be reproduced.

A consumer's home is not a point of sale location
within the meaning of the Freeny patent.

6. The term "material object" as used in claims 1-56 of the
Freeny patent is a tangible medium or device in which
information can be embodied, fixed, or stored, other than
temporarily, and from which the information embodied
therein can be perceived, reproduced, used or otherwise
communicated, either directly or with the aid of another
machine or device, that:

a. Must be offered for sale, and be purchasable, at point of
sale locations where at least one IMM is located;

b. Must be offered for sale independently from the
information that may be reproduced onto the material
object;

c. Must be physically separate and distinct from the IMM
located at a point of sale location;

d. Upon reproduction of the selected information, is
removed by the consumer from the IMM located at a point
of sale location; and

e. Is intended for use by the consumer of the material
object |*49| at a location other than the point of sale
location.

7. The term "information manufacturing machine" or
"IMM" as used in claims 1-56 of the Freeny patent must,
at a minimum, have the following four separate and distinct
components: (a) a Manufacturing Control Unit, (b) a
Master File Unit, (c) an Information Manufacturing Unit,
and (d) a Reproduction Unit.

Also, the Master File Unit and the Reproduction Unit
components of the IMM must, at a minimum, have the
following attributes:

a. The Master File Unit must function as the permanent
storage unit for encoded information to be reproduced in a
material object and catalog codes that uniquely identify the
encoded information to be reproduced in a material object.
The Master File Unit cannot perform the step of
"reproducing in a material object the information identified
by the catalog code" at point of sale locations as set forth
in claim 1 (and the claims dependent thereon), nor can it
"reproduce selected information in a material object" at the
point of sale location as set forth in claim 29 (and the
claims dependent thereon), nor can it "reproduce the
information identified by the catalog code in a material
object" at |*50| point of sale locations, as set forth in
claim 37 (and the claims dependent thereon).

b. The Reproduction Unit must receive information on a
unidirectional signal path from the Information
Manufacturing Unit in analog form, and reproduce the
received information in at least one of two or more blank
material objects located at the IMM at a point of sale
location. The Reproduction Unit cannot perform the
functions of the Manufacturing Control Unit, the Master
File Unit, or the Information Manufacturing Unit.

SO ORDERED:

BARBARA S. JONES

UNITED STATES DISTRICT JUDGE

Dated: New York, New York
May 13, 1998